US actions aimed at restricting the Strait of Hormuz, alongside Iranian threats, are described as supportive for Brent prices, with the impact framed through a tighter global oil balance and faster inventory draws.
After the Islamabad talks broke down, the outlined scenario has the Strait shifting into two routes, with one potentially subject to Iranian transit or toll measures and the other at risk of being made impassable via sea mines.
Supply Shock And Inventory Impact
A halt to Iranian crude exports is estimated to remove 1.5–2.0 mb/d from global supply, lifting the projected supply deficit (as reflected in inventory draws) to 7.9 mb/d in April and 6.1 mb/d in May, after accounting for rerouting, SPR releases, demand destruction, and other offsets.
Market normalisation is now pushed back from late April to mid-May, while global stocks are estimated to have fallen by more than 190 million barrels since the conflict began.
Global inventories are estimated at about 7.9 billion barrels in total, including roughly 6.2 billion barrels on land and about 1.7 billion barrels at sea.
With a potential shutdown of the Strait of Hormuz, oil prices look strongly supported in the coming weeks, especially as the conflict could remove 1.5 to 2.0 million barrels per day of Iranian crude at a time when global inventories have already been drawn down by over 190 million barrels since the conflict began.
Positioning For Higher Prices
This setup presents a clear opportunity to establish bullish positions in crude, with call options—particularly May and June contracts—offering a direct way to express a view on an upside spike while aligning with the expectation that normalisation is delayed until at least mid-May.
Recent market action already reflects these risks, with Brent futures up more than 12% over the last month to above $115 per barrel, while implied volatility has risen as the CBOE Crude Oil Volatility Index (OVX) reaches levels not seen since the late-2025 escalation, suggesting the market is pricing large swings with an upward bias in the event of a supply shock.
Comparable episodes, such as the 2019 drone attacks on Saudi facilities, produced temporary but sharp spikes, but with roughly 20% of global oil consumption transiting the Strait of Hormuz daily, a prolonged disruption would likely be larger and more sustained, implying a more severe and lasting deficit than past incidents.
The tightening backdrop is also steepening backwardation in the futures curve, making calendar spreads a relevant consideration—buying the front-month contract and selling a deferred contract—to potentially benefit as near-term supply constraints intensify.
